April 25 (Bloomberg) -- German Chancellor Angela Merkel’s
government edged up its growth forecast for Europe’s biggest
economy this year, citing what it sees as companies’ willingness
to step up hiring.

Germany’s gross domestic product will expand 0.5 percent in
2013, Economy Minister Philipp Roesler said today in a posting
on Twitter, lifting a prior prediction of 0.4 percent made in
January. The ministry left its growth forecast for 2014
unchanged at 1.6 percent.

“There is every reason to be optimistic about the
future,” Roesler said in an e-mailed statement. “The labor
market is still in full swing. Employment will continue to grow,
unemployment will continue to decrease.”

Germany is raising its forecast for growth even as the 17-nation euro area faces a second year of recession. Even so,
German business confidence fell for a second month in April,
exports dropped more than economists forecast in February and a
gauge of industrial output signaled contraction, raising the
prospect the economy fell into a recession in the first quarter.

German unemployment is forecast to continue to fall, while
countries such as Spain suffer record levels of joblessness. The
German unemployment rate will drop to 6.6 percent in 2014 as
employment at companies increases from 41.6 million last year to
41.8 million this year and 41.9 million in 2014, Roesler’s
ministry said. In Spain, the jobless rate rose to 27.2 percent,
the highest in at least 37 years, the National Statistics
Institute in Madrid said today.

Job Opportunities

“Growth in Germany is supported this year and next by the
domestic economy,” Roesler said. “The robust labor market
supports wage and income growth, strengthens purchasing power
and provides opportunities for new employment.”

With Merkel seeking a third term in Sept. 22 elections, the
buoyant employment market may bolster support for her coalition
parties. Merkel’s Christian Democratic bloc had 42 percent
support in a Forsa poll yesterday, while the Free Democrats, led
by Roesler, met the 5 percent threshold to enter parliament. The
combined tally, if replicated at the election, would be enough
for a rerun of their current coalition.

The main opposition Social Democrats and their Green party
allies had a combined 37 percent in the poll of 2,500 voters in
the week ended April 19. The margin of error was as much as 2.5
percentage points.